More than 700 public patients have had their privacy breached and potential delays in their follow up care after more than 1600 medical letters were found dumped in a Sydney bin.

NSW Health is investigating the incident involving a sub-contractor for a company tasked with transcribing medical letters sent from specialists to general practitioners.

On Tuesday, April 11, a man found piles of follow-up letters containing patient details stuffed into a garbage bin at an apartment block in Ashfield. It is understood there were more than 1600 documents in total. Some of the letters were duplicates.

The man called in his neighbour, a female health worker, who recognised the documents were out-patient letters and contacted Ashfield police.

A sub-contractor for Global Transcription Services (GTS) was supposed to take the letters home to post but instead stuffed them into the bin. The young woman had been dealing with personal upheaval and health issues, Health Minister Brad Hazzard said on Thursday, adding it was inappropriate to comment further.

The letters related to 768 public hospital patients from Royal North Shore, Gosford Hospital outpatients and Cancer Centre and Dubbo Hospital Cancer Centre.

It is not known how many private patients were affected. It is understood that less than one per cent of affected patients were treated by Lifehouse.

The bulk of the letters were treatment progress reports from specialist consultations in December.

The incident prompted health minister Brad Hazzard to launch an external review of the processes of transcription services across all NSW public health facilities. The review will be conducted by KPMG.

"It's completely unacceptable ...We have to get right to the bottom of what has gone wrong here, " Mr Hazzard said.

"This is a human system and things can go wrong occasionally ... but I want to be satisfied that we are doing everything possible to reduce the risk of human error," he said.

NSW Health has alerted the Acting NSW Privacy Commissioner.

Mr Hazzard said he was concerned to learn GTS had no way of auditing their letter delivery processes.

Chief Health Officer Dr Kerry Chant said clinicians at Lifehouse, RNS and Gosford hospitals had reviewed the patients involved and found no clinical issues as a result of the delay in correspondence.

Doctors at Dubbo Cancer Centre had contacted eight patients directly or through their GPs to either bring them in for a consultation or arrange follow-up referrals, she said.

There appeared to be no negative clinical outcomes for the patients, she said.

It is the second publicly disclosed patient privacy breach in NSW in two months. In March, ABC News reported on documents detailing a number of breaches including medical records found in a public car park.

Questioned over whether there could be similar breaches, Dr Chant said: "We have nothing to indicate from our investigations that this was a repeat episode. It appears to be a one-off episode."

Mr Hazzard said the incident bolstered the case for an overhaul of the current paper-heavy health correspondence system and a comprehensive switch to digital health record keeping.

Opposition health spokesman Walt Secord said the breach was "sloppy and dangerous".

"It is absolutely frightening that private medical records were left in rubbish bins in an Ashfield apartment block. This just should not happen," Mr Secord said.

"It is extremely distressing for cancer patients undergoing chemotherapy treatment to find out their personal medical details have been handled this way.".